The Investor's Guide to Smart Media

December 5, 2011

If you follow our blog, you know we tend to slam the financial media quite a bit. It doesn't help that several of the folks in our office revel in the opportunity for a good debate, but we do try to be selective about the fights we pick. It usually happens when someone says something so factually disconnected from reality that we would feel irresponsible letting the piece go unrefuted, and, truth be told, we could probably get up on our soap box far more often.

Let us be clear- we don't hate everyone in world of financial media. We don't think all financial press are incompetent. In fact, over the past several weeks, we've been pretty impressed with several journalists who have called to inquire about the MF Global scandal, the futures market, and what the whole mess means for investors. We also are not trying to discourage anyone from reading coverage of the markets or investing world; knowledge is power.

That being said, the pursuit of knowledge from the financial media still requires some diligence on the reader's behalf. Most of the time, mistakes or bias inserted by authors are not intentional (at least, that's what one has to hope), but their presence means that investors need to cultivate and filter their media consumption. Doubt what we're saying? Well, that's a step in the right direction. Let us explain...

Take it with a grain of salt...

If you don't know any better, an article printed in a well-established financial rag may go unquestioned in your mind. The Wall Street Journal, Economist, Financial Times, and so on may seem above reproach, and the real-time commentary seen on CNBC and BCNN may seem like the best reporting the world has ever seen.

Until you start to think about what's being said. Some of the "facts" you hear repeated so often are little more than financial folklore, but you'll find it perpetually packaged as breaking news. The knee jerk reaction to many discovering the rampant dissemination of inaccurate information is to question how it happens. The press, after all, is supposed to provide expert coverage of the world around us, right?

Wrong. The average member of the financial press is likely a young reporter, fresh out of college, who has happy to get a beat. They may or may not have any background in finance, and if they do have a background in our corner of the world, they may not have any actual understanding of the parts they need to cover. Stock brokers and managed futures advocates usually agree on close to nothing, but would both tell you with fervor that the realms they operate in are different and complex. To assume that someone who has experience in one area of finance is also competent enough to provide analysis in another realm is wishful thinking, at best. But new grads are cheaper to employ, so experience and knowledge comes in second to the bottom line.

Speaking of the bottom line... it's no secret that journalism has been bleeding money over the past decade, as the internet dramatically change the way the public consumed their information. The Chicago Tribune, once a stalwart of the Windy City, has declared bankruptcy. The New York Times, Financial Times and Wall Street Journal have struggled to generate the same amount of revenue they had in the golden days of printing, resorting to paywalls around their content. In short, they're looking to maximize their profits, even if the process becomes quick and dirty.

How do we mean? In a digital age, where a well-timed and executed tweet can roil a market, the rush to be the first to break a piece of news can mean skipping trivial things like research, fact-checking, and, at times, even spell checking. When speed takes precedence over accuracy, content becomes increasingly questionable. While this can be obnoxious in political or social reporting, it can be disastrous in financial media, when market emotional states change more rapidly than a teenage girl's.

It's not just the speed element here- it's about finding your content wherever may be necessary. In many instances, this may leave news outlets relying on outside guest contributors. For the financial media in particular, there's no shortfall of volunteers here. Every RIA, stock broker, and portfolio manager has something to say, and is likely willing to say whatever it takes to get their name in front of the public.

These authors are unpaid, and presumed to be experts, requiring even less of the fact-checking referenced above, but they're not providing material out of the kindness of their hearts. Most of these outside authors are writing to gain exposure and publicity, and all too often, the content they attempt to pass off as news is little more than thinly veiled marketing. The result is frequently the amplification of the accuracy issues that the need for speed produces, and the perpetuation of mainstream misconceptions.

Are we being a little harsh? Maybe, but with more evidence piling up every day, it becomes difficult to ignore the problem. Consider the fact that...

· Major news network correspondents were referring to MF Global on-air as a hedge fund weeks after the scandal had erupted.

· Most mainstream news outlets still refer to managed futures as a component of the "hedge fund" world- despite totally different strategic, regulatory and performance factors that make it distinct.

· Most financial publications continue to apply the term "managed futures" to a wide variety of investments, ranging from commodity pools to fund of funds to mutual funds to retail futures trading- all of which are very, very different.

· Larger news distributors such as the San Francisco Chronicle willingly disseminate inaccurate information, and do nothing to remove or edit the content when the inaccuracies are pointed out.So yes, we're a little harsh, but we've got decades of reporting to back up our beef.

The dawn of citizen journalism has certainly not helped the problem. Estimates on the amount of active blogs held across the world varies based on the source, but Technorati estimates that there were over 164 million blogs worldwide as of July 2011, with others projecting monthly growth of over 50K additional blogs moving forward. In some ways, this could provide a check on the world of traditional media. If you're not reporting all the facts, odds are there's someone out there who knows it, and if they've got a blog with enough reach, you're going to look foolish. In theory, this would push journalists to be as accurate and informed as possible.

In theory.

In reality, you see a great deal of bloggers commenting on complex issues they may or may not understand. Google has become the authority for most of the curious world, with effective design often the only litmus test for the authority of a site. With a wide host of clean looking blog templates available for general use, passing this litmus test is not as difficult as it used to be, which means that the uninformed can be held in context with the experts on any given day- as long as they're winning with the search algorithms when a particular topic is searched. We lost count of how many investing "expert" sites we've stumbled across that had absolutely nothing to do with expertise and everything to do with Google Adsense revenue.

Don't misunderstand us- we're not going to go as far as SocGen and say that the financial blogosphere is dangerous (in fact, we've said quite the opposite in the past). If you want to become the blogosphere's next Jim Cramer and tell the world to buy as much stock as possible in Blackberry, you go right ahead. We will say that Attain believes in responsible reporting, and that people should be careful about the information they send out into the world wide web, but we know we can't force everyone to subscribe to our perspective.

That means that the filtering of information falls on your shoulders- the reader.

Why it Matters

For some reading this, the laundry list of problems in the financial media may elicit little more than an eye roll. Sure, you may be thinking, the reporting isn't perfect, but does it really matter if there are a few issues here and there? I'm getting advice anyway- why do I need to have all the facts all the time?

The answer is that it matters a lot, and for three reasons.

For one, just because you're getting investing advice from someone does not mean you should tune out the rest of the world. In fact, a large part of why we publish our own newsletter is to keep investors informed of both the ups and downs in the managed futures space. Sure, you could rely on an investment advisor to sift through such information and make judgment calls. After all, that's what you're paying them for, right? That may be the case, but as we've seen time and time again, investment advisors are not always as on top of things as one might like. They're banking on you, as an investor, sitting back passively and letting them do their thing, but you may find their performance improves if you're informed and pushing them to protect you and your assets.

For two, some investors don't have an advisor sifting through the financial news for them. Most investors aren't going to think twice about articles and pieces distributed by the financial media, falling back on that "expertise" assumption. This creates a perilous scenario where investors may be putting their money somewhere that, according to someone in the financial writing world, seems safe, but in reality, presents far more risk than you'll see on the surface.

One need only glimpse back to the Dot Com bubble for affirmation of this idea. During this time period, when over 289 IPOs caught the attention and imagination of the world's investors, there was plenty of reporting (albeit, not as digitally dominated as it would be today) on the allure of these new juggernauts. The promise of a web-based future had some writers encouraging investors to ignore more traditional metrics when evaluating an IPO (read: P/E) in favor of more forward-looking metrics. Cue the 2000 crash, and suddenly, these "experts" didn't seem quite as reliable.

Then there's the ugliest of rogues- the one who places advice with the intent to turn around a personal profit. It's not as common as it might have been in the past, and in many cases, charges wind up getting passed over as a "misunderstanding," but if a journalist is not disclosing a conflict of interest at some point in an article, an investor may get duped into allocating funds without fully comprehending the writer's reasons for publishing the article. Again, it's a situation we hope doesn't happen very often, but it's certainly a concern worth measuring.

But the individual investment pieces may be overshadowed by a larger hazard- the propagation of inaccurate articles slamming entire asset classes or strategies. These articles are usually some of the worst offenders when it comes to negatively impacting investors, especially because they tend to speak in sweeping generalizations with cherry picked data that at least appears to support their conclusions. Historically, these have been the articles we're apt to attack, because the people criticizing or building up specific strategies or asset classes are often 1) poorly informed on the subject, and 2) pushing the most distinct of agendas.

If you read through some of the rebuttal pieces on our blog (here, here, and here, for starters), you'll notice that the original articles were written by those outside of the futures industry altogether. Given how complex futures trading happens to be- and, in particular, how complex managed futures strategies can be- the arguments levied against the investment opportunity are typically pretty shallow. We find the pieces laughable because we know better. Other investors may not be so lucky. Think about it- an article published on a well-respected site by an author with at least some kind of background or connection to the world of finance making arguments about a little known asset class with convincingly applicable jargon.... odds are most readers won't question its validity. Unfortunately, that means they're missing out on a significant opportunity.

The knife cuts both ways here. Asset classes that are well known and at least partially understood by the public in general (i.e. stocks) become easy sells for the SEO minded web-journalist. By appealing to common knowledge and strategies- like the ever-flawed "buy-and-hold" model of investing- the authors can almost instantaneously ensure that their article will receive a cursory nod... and if they know how to work the system properly, that content will show up far before the more informed perspectives written by people who know better but aren't worried about their page rank. In cases such as these, investors may unwittingly buy into a strategy that doesn't work for them (or anyone, really) based on a false sense of security.

How to Sort Through the Mess

It's a scary world out there in the land of financial media, but as we said earlier, it's not all bad. In fact, there's quite a few people out there with a keen eye and wicked wit. Navigating your way to their coverage, however, can be a treacherous journey, and even then, how will you know them when you see them? Never fear- there are tactics you can employ to dodge the pitfalls of shoddy financial media without sacrificing your ability to keep up on the latest.

Demand solid argumentation.

Most people associate the term "argument" with fighting and yelling, but at the end of the day, an argument is nothing more than a well-supported and defended position. There's a very good chance that, in 100 different communication textbooks you would find 100 different explanations of what a good argument looks like, and the odds of the field reaching consensus on the issue aren't good- especially since they've been debating it since Aristotle's days. That being said, even with these differences, there are several elements that any credible argument should possess.

· The Claim - The assertion the argument is making.

· The Warrant - The reasoning for why the assertion makes sense.

· The Data - The qualitative or quantitative evidence that substantiates the claim and warrant.

· The Caveat - An expresssion of the limitations of the warrant and/or data.

· The Defense - An explanation of how those limitations impact the validity of the claim.

Essentially, a solid argument will make its case while disclaiming its own limitations. Each step in this process is important to those seeking information from the financial media. If any portion is skipped, odds are you should be skeptical about the information being presented.

· If they stop at the claim... the author is either unintelligent, uninformed or foolish. It's one thing to have a belief; it's another to pass it off as fact without even attempting to rationalize the idea. This kind of argument is the easiest to spot, and will usually be found on unabashedly biased sites (think political blogs). For instance, someone throwing out a claim like, "Facebook is the biggest no-brainer IPO ever," is producing nothing more than an unsubstantiated claim.

· If they stop at the warrant... the argument may make sense in theory, but may not hold water in practice. It is often much easier to explain an idea than it is to support it, and that whole support concept often requires research that many authors don't have the time, energy or inclination to do. That doesn't necessarily mean the information being presented is inaccurate, but it does mean that you should verify the statements being made before buying into them, especially if the point being made seems to be a sweeping generalization. For example, a writer might say something like, "Telecommunication stocks are a good bet for the future because the world is becoming increasingly digital." That may be true, but without the evidence or data to back it up, your ability to assess the magnitude of the projection is severely limited.

· If they stop at the data... you should probably question the conclusion. Data is fantastic, but no quantitative or qualitative analysis is ever going to be perfect. No one is right all the time, and failure to admit that should raise a red flag for the reader. If the author fails to disclaim the limitations inherent in the data being used, there are two scenarios. In the first, the author simply didn't think about questioning the data or didn't know what those limitations might be, which reflects upon their dedication to research and analysis, and should probably make you question the points being made. In the second, the author knowing omits the caveat in the argument... and this is where things get dangerous. Mark Twain once said, "There are three kinds of lies: lies, damn lies, and statistics." Why might this be the case? As numbers nerds ourselves, let us tell you- numbers are very easily manipulated. If an author is knowingly appealing to a statistic without explaining its limitations, there may be a reason. For instance, it may sound impressive to find out that a running back had caught every pass thrown his way in a given season... until you find out he'd only been thrown to twice.

· If they stop at the caveat... they're silly- especially if that caveat, on face, appears to gut their entire argument. It doesn't mean they're wrong. But they are certainly silly.

As a consumer of financial media, you should always filter what you read though the structure of effective argumentation. Ask yourself the following questions:

1. Does the author provide any form of evidence to support their claims?

2. Is the evidence applicable to the argument being made, or being twisted to apply?

3. What is the quality of the source of the evidence? Is it from a 7th grade blog or a peer-reviewed journal?

4. When is the evidence from? Has more research on the subject come out since this publication that negates the conclusion?

5. If the evidence is based on quantitative analysis, what were the parameters of the data set? Size, history, selection bias, and method of calculation all things to consider.

Question motive.

People may have a million reasons to write something at any given moment. A journalist with no stake in the industry can write a slanted piece just as easily as someone seeking free publicity can provide a balanced perspective, so, unfortunately, isolation of motive is not as simple as one might like. With no easy way to categorize the credibility of an article's author, it's important to carefully consider what motives may be behind the writing of an article.

This step is one that many financial media sites already have in place- particularly those that rely on user-generated content to fill their feed. For instance, sites like Seeking Alpha and Morningstar will provide authors opportunities to disclose their positions in the stocks they're writing about. In those cases, motive can be transparent. In other cases, it's not as simple. If you're reading a piece that is particularly critical of or kind to some form of investment or individual, it may behoove you to look into the background and experience of the author in question. Sometimes they're just very opinionated; other times the author may be pushing an agenda under the guise of "news."

This concept doesn't just apply to authors, though; it also applies to their sources. Quantitative information, in some ways, is easier to determine limitations with, as numbers are typically a pretty black and white playing field. Qualitative support, on the other hand- like comments or quotes from supposed experts- may require you to do a little bit of digging in order to verify the credentials of the speaker in question. If a source is unnamed, you should always question the conclusions being drawn by the individual. Sometimes they're anonymous because of potential fallout, and sometimes they just prefer their privacy, but at the end of the day, if you cannot be sure of their expertise, you need to be able to verify their ideas elsewhere. We saw this come back to bite a Forbes journalist recently... though anyone who refers to their source as an "enlightened fellow" is just asking for people to laugh at him.

Sometimes motive comes down to the news source itself. The media in general is frequently criticized for being biased when it comes to political or social issues, and as recent events have demonstrated, these issues all too often become intertwined with the world of business. We won't quite go as far as some folks in politics and claim that the whole media machine is corrupt and out to get us, but we will admit that general bias can, at times, impact how a source reports on a given subject. Fox News and MSNBC, for instance, are probably going to tell the same story in very different ways. While this does not have as much of an impact on finance as it does social and political situations, it's still worth considering as you peruse the news.

Force yourself outside of your comfort zone.

One of the great ironies of ever expanding news coverage of every event and non-event in the world is that it hasn't really expanded our horizons. Instead, it has pushed us to a point where we cultivate an information stream that merely affirms what we already believed to be true. Such a development isn't necessarily surprising; communication and psychology scholars have for years commented on humanity's aversion to having their beliefs challenged. No one likes to be wrong. The internet has simply allowed us to better funnel the available information into a self-affirming, if narrow, stream.

The personalization of news consumption may be a more pleasant experience for the reader, but it's not the most educational. When you are only exposed to one perspective, your ability to understand that perspective and those contrary to it is severely diminished. Cultivation analysis indicates that the media we're exposed to plays a significant role in shaping our personal reality. The problem is, in a world with more gray than black and white, these carefully pruned personal realities are not going to be in line with actual reality, and our newfound ability to filter our news sources according to our preferences only amplifies these impacts.

What's the point of the Comm Theory 101 crash course? We want you to step outside of your comfort zone and read about financial issues from a variety of sources. If you're particularly interested in a given idea in the world of finance, seek out as much credible information on both sides of the issue to ensure you're getting the full picture. More importantly- do so with an open mind. Just because you disagree with the politics of Fox News or MSNBC doesn't mean they can't provide an informative take on a given subject.

Is it wishful thinking to hope that more variety in the news you're exposed to will lead to a more informed and cultured financial worldview? Maybe. There is no shortage of studies out there which demonstrate an inability of a reader to equitably consider information that runs contrary to what they had initially believed. The vast majority of these studies, however, take place in a controlled environment where the subjects are unaware of the point of the tests being administered. The conclusions support the idea that it is our natural instinct to defend our beliefs at all costs- not that we have an inability to consider alternatives.

Call people out.

The last tip we have for consumers of financial media is perhaps the most difficult to put into practice. Should you run across a piece that is inaccurate or irresponsible, don't just click on to the next piece- say something about it. Comment at the bottom of the piece, explain the problems in the article on your blog or write a letter to the publication or website's editors. Think of it as a service to your fellow man who may not be able to recognize the problems in the piece. Who knows? If enough people start calling people out for poor reporting, we might see a better effort out of those disseminating the information.

Maybe we're just optimists. Maybe it doesn't matter. Maybe the editor does nothing about it or the comment is never approved to go public. There is actually some pretty persuasive literature out there that suggests such efforts are utterly futile for many of the same reasons that the previously referenced confirmation bias can impact the way we filter the world around us.

That doesn't mean it isn't worth the effort. You never know if that one comment that does get published might help save someone from making a terrible mistake... and we tend to be "glass half-full" kinds of people.

That being said, there is a difference between rebutting an argument and launching ad hominem attacks. Personalizing issues only undermines your credibility and distracts people from the more important issues. In the bigger picture, widespread ad hominem attacks in comment sections have led many a blogger and journalist to simply eliminate the ability for a reader to comment at all on their content, shutting down significant opportunities for discourse. Those who have not shut down their comment sections still frequently lament the drivel that ends up there. Barry Ritholtz hits the nail on the head in his lead-in to his blog's comment section:

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

Do yourself, and everyone else, a favor- surprise the Ritholtz's of the world and actually contribute something meaningful to the conversation. The caveat to our overall argument in this piece (see what we did there?) makes avoiding those ad hominem responses even more important. As we mentioned in the very beginning, not all members of the financial press are bad. Just because a journalist makes a mistake doesn't necessarily mean they're an idiot. Maybe they forgot to include the limitations of a given argument because they assumed their audience already knew about it. Maybe they presented poor data because the source they drew it from was typically reliable, and they didn't check the statistics out this time around. Maybe they're making a good faith effort and just missed the point. Maybe there are some people out there who deserve to be put in their place, but you have no way of knowing whether the author in question is one of those folks. So, yes, you should respond to inaccurate or misleading material, but keep the responses constructive.

The Road Ahead

That's all fine and well, you might be saying, but where do I even start?

Fair question. The answer, however, will differ based on the person. Are you currently reading a wide host of conservative news sources? Consider branching out to more liberal publications. Are you getting the bulk of your news from Keith Olbermann? It may be time to temper him out with a little Sean Hannity (or just avoid extreme pundits altogether). If you're already reading a fair amount in the financial blogosphere, it can be a little more difficult to isolate the bias in your favorite sources. In these cases, you'll want to look for more than the typical conservative v. liberal dichotomy. Balance out bearish writers with bullish ones, a Keynesian economist with an Austrian economist, and a stocks aficonado with a fixed income specialist and a managed futures expert (especially us).

For those of you who are just starting to wade into the murky waters of financial reporting, we hope we haven't scared you off. While the evaluation process can be intimidating to begin with, you'll find that the good ones lead you to more of the same. On our end, we highly recommend several news sources. Generally speaking, these are the folks using solid argumentation, reliable information and providing beneficial insight into the markets. Be sure to check out The Big Picture, The Reformed Broker, Abnormal Returns, MarketBeat, DealBook, Paul Kedrosky, ZeroHedge, Nouriel Roubini, All About Alpha and FT Alphaville. ources on your own over time. As the blogosphere grows and the world of traditional media continues to shift to a digital dissemination model, the task may become even more difficult, but with what's at stake, responsible consumption of financial media will become even more important.

In the meantime, we'll keep picking fights. This is fair warning to those who cannot or will not defend their own absurdity. We hope that you, as an informed reader, join us in arms, or, at least, begin to ask questions for your own benefit in your quest for more knowledge. For, as Rene Descartes once said, "If you would be a real seeker after truth, it is necessary that at least once in your life you doubt, as far as possible, all things."

IMPORTANT RISK DISCLOSURE

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The month of November saw some pretty dramatic moves. What we thought was a month moving down at a fairly consistent piece reversed course at the last minute to pare down overall losses for most markets. Stocks were mostly down, but not by as much as anticipated. The S&P 500 finished down -2.77%, and the Nasdaq was down -2.59%, but the Dow Jones Industrial Average was able to move back into the black on the month, finishing up 1.23%. Uncertainty kept U.S. Treasuries on the ascent, with 30 Year Bonds up 2.05% and 10 Year Notes up .78%.

In currencies, results were mixed. In the face of continued European drama, the British Pound was down -2.38%, the Euro down -2.84%, and the Swiss Franc -4.00%. The U.S. Dollar and Japanese Yen, as traditional safety plays, were up 2.87% and .65% respectively. In metals, Gold was the sole jump- up 1.13%, with slides across the board otherwise. Copper was down -1.95%, Platinum down 2.91%, Silver down -4.78%, and Palladium down -6.14%.

Energies saw Crude headed skyward, jumping 7.68% over the course of the month, while Heat Oil was down -1.50%, RBOB Gasoline was down -1.80%, and Natural Gas was down a jaw-dropping -12.90%. Lows abounded in Grains, with Corn at an 11 month low after falling 7.09%, Wheat at a multi-year low after falling -5.48%, and Soybeans down -7.07% to hit a 13 month low. Meats were up, with Live Cattle gaining 3.06% and Lean Hogs up 1.05%. Softs, however, were a little more mixed. On one hand, you had Kansas City Wheat up 2.84%, and OJ up 3.99%, but the slides were much larger. Sugar was down -8.07%, Cotton down -9.32%, and Cocoa plummeting a total of -25.32%.

Trading Systems

As concerned as we were in November about trading systems performance, things would up working out pretty well on the day trading side of things. The lowest profits were turned in by Compass ES up +$202.5, Upper Hand ES up +$678.75, and PSI! ERL up $975. From there we saw Compass SP up +$1200.00, BounceMOC ERL up +$2014.76, and BounceMOC EMD up +$2132.94.

The swing trading side was a little more mixed. Some movements were small, like Bounce ERL up +$10.00 and Bounce EMD down -$25.00. Other movements on the month were a little more substantial. In the winners column we had BAM 90 Single Contract ES up +$1465.00, Bam 90 NQ up +$1473.33, Bam 90 ERL up +$2363.29, Bam 90 EMD up +$2683.34, and TurningPoint X2 ES up +$5817.50. Unfortunately, some in the losing column saw even larger movement. Jaws US 400 was down -$2897.25, Bam 90 ES was down -$5165.00, and Moneybeans S was down -$5027.50. Then the losses jumped, with Strategic ES down -$9718.82, BAM 90 M Squared ES down -$12,258, and Strategic v2 down -$39,155.

Managed Futures

November looked like it might be a little bit kinder to managed futures than October... right up until the end. At that point, many of the trend followers that had finally latched on to some consistent market movement found their worlds turned upside down by the month end reversal. Systematic multi-market traders went from strengthening to a mix of losses and small gains, while short-term systematic traders found themselves posting losses across the board. Option sellers, on the other hand, had a decent November. The hope at this point is that December provides some viable trends that allows the asset class to pare back some of its losses year to date.

*Max DD= A drawdown is the “pain” experienced by an investor in a specific investment. As an example, an investor starting out with a $100,000 account who sees it fall down to $80,000 before it runs back up to $110,000 saw a $20,000 loss ($100K – $80K), which would equal a -20% ($20K/$100K) drawdown. The so called Maximum Drawdown (Max DD) is the worst such peak to valley down period for an investment.

**Disclaimer: Past performance is not necessarily indicative of future results. These performance numbers are calculated using the liquidating value of a single client at Attain trading the listed program, and are believed to be representative of all similar clients invested in the program. A 20% incentive fee and 2% annual management fee are deducted from all profitable months, regardless of whether the program is at a new equity high. These numbers may vary from the actual performance numbers presented by the CTA upon completing their accounting for the month gone by, and should not be considered apart from the performance numbers listed in the disclosure document for the program listed.

IMPORTANT RISK DISCLOSURE Futures based investments are often complex and can carry the risk of substantial losses. They are intended for sophisticated investors and are not suitable for everyone. The ability to withstand losses and to adhere to a particular trading program in spite of trading losses are material points which can adversely affect investor returns.

Past performance is not necessarily indicative of future results. The performance data for the various Commodity Trading Advisor ("CTA") and Managed Forex programs listed above are compiled from various sources, including Barclay Hedge, Attain Capital Management, LLC's ("Attain") own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

The dollar based performance data for the various trading systems listed above represent the actual profits and losses achieved on a single contract basis in client accounts, and are inclusive of a $50 per round turn commission ($30 per e-mini contracts). Except where noted, the gains/losses are for closed out trades. The actual percentage gains/losses experienced by investors will vary depending on many factors, including, but not limited to: starting account balances, market behavior, the duration and extent of investor's participation (whether or not all signals are taken) in the specified system and money management techniques. Because of this, actual percentage gains/losses experienced by investors may be materially different than the percentage gains/losses as presented on this website.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.